Who are the winners and losers in Biden’s SAVE student loan repayment plan based on income?

Who could benefit the most from Biden’s latest attempt at student loan forgiveness?

Undergraduates at public two-year colleges might be in the best position – if the administration’s new policy holding predatory colleges more accountable goes as planned, that is.

And borrowers who earn certificates, rather than four-year degrees, using the new income-driven repayment plan will have to pay back only about a third, on average, of what they borrowed.

Those findings were laid out in a research analysis published this week by the Urban Institute, a social and economic policy think tank. The report uses data from the College Scorecard, an online Education Department tool that lets consumers compare colleges, to determine what loan repayment might look like under the policy revision dubbed by the administration "Saving on A Valuable Education," or SAVE. The system bases monthly loan repayments on borrowers' incomes and family sizes, according to the Education Department, lowering payments for almost everyone who participates.

Income-driven repayment is not a new concept, but Education Secretary Miguel Cardona has referred to the newest iteration of the program as the “most affordable repayment plan ever.” For some borrowers, it will reduce monthly payments to $0. More than 4 million borrowers have already enrolled, and it will be fully available to all federal student-loan borrowers starting July 1, 2024.

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Easing student loan repayment for undergrads

Undergraduates are in luck, the report says. Nearly all the largest undergraduate fields in the country will see a decrease in the number of programs in which borrowers typically repay their loans in full.

Yet the plan, according to researchers, is less likely to increase the already large benefits for typical graduate borrowers, who have historically benefited disproportionately compared with undergrads from income-driven repayment plans. Graduate students on average take out more loans than undergraduates, and a 2020 report from the nonpartisan Congressional Budget Office showed they received the most help from income-based programs.

Undergraduate psychology programs could also see an easier path to repayment, according to the report. Under current income-driven repayment policies, nearly 100% of programs require such borrowers to fully repay, the report says. That number will drop to a little more than a quarter of programs under SAVE. The program seems to be good news for borrowers pursuing humanities and teaching degrees, too.

Millions plan to use Biden's SAVE plan to cut student loan payments even as some in GOP try to stop it

A smaller difference, the researchers suggest, is expected for borrowers pursuing degrees in engineering, finance or registered nursing. In those fields, most undergraduate programs based on income already require the typical borrower to fully repay their loans. That doesn’t seem likely to change, at least not significantly, because those borrowers generally go on to higher-paying jobs.

When it comes to the SAVE rollout, one big question mark will be the implications of the Biden administration’s efforts to crack down on predatory colleges, according to Jason Cohn, a research analyst at the Urban Institute and one of the authors of the report.

The analysis, for instance, predicts the highest loan forgiveness rate under SAVE will be at public two-year institutions. But it's a conclusion that can only be made after excluding programs likely to fail new accountability metrics rolled out last month by the Education Department.

Without the new so-called "gainful employment" rule, Cohn told USA TODAY, the highest forgiveness rate could actually be at for-profit institutions.

“A lot of it really comes down to how institutions and students see this issue, how this information gets spread, and also how accountability efforts play out,” he said.

Zachary Schermele is a breaking news and education reporter for USA TODAY. You can reach him by email at zschermele@usatoday.com. Follow him on X at @ZachSchermele.

This article originally appeared on USA TODAY: Biden’s SAVE student loan plan: Who are the winners and losers?